R-9170
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FINANCE MD sd \F \ATTY\USERS\CLAUDIA\BILL 1614
CouncIl Meeting July 22,1997 Santa MOnica, California
RESOLUTION NUMBER 9170
(CITY COUNCIL SERIES)
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SANTA MONICA
OPPOSING ASSEMBLY BILL 1614 AS CURRENTLY DRAFTED AND
RECOMMENDING VARIOUS CHANGES
WHEREAS, the City of Santa Monica has adopted a Utility User's Tax (UUT)
Ordinance for the purpose of providing tax revenues to pay for essential mUnicipal
services, Including police, fire, and numerous other valuable commumty services, and
WHEREAS, the City's Utility User's Tax applies to certain utility services,
regardless of the technology employed to deliver those services, and since neutrality In
the application of a tax IS an essentIal pnnclple to assure fairness and equity among the
tax paYing citizens of the City, and
WHEREAS, the City of Santa MOnica's Utility User's Tax (UUT) Ordinance Imposes
a tax on the use of telecommunication services Within the City In the same manner as the
federal excise tax IS apphed, regardless of the technology employed to deliver thiS service,
and
WHEREAS, access to the Internet over the public-swItched network IS now offered
by all maJor telecommunication providers for a small monthly fee, and the Internet has
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become widely used by the public, for pnvate and commercial purposes, as a means of
communications, and
WHEREAS, as a result of advances In digital technology, VOice quality
commUnications are now possible over the Internet, and when similar vOice quality
communications take place over the publlc~swltched network, they are taxable under the
federal excise tax rules and the City's Utility User's Tax ordinance, and
WHEREAS, to the extent that such vOice quality commUnications over the Internet
are deemed taxable under the federal eXCise tax, now or In the future, charges for access
to the Internet would be subject to the City's Utility User's Tax, In the same manner as
charges for access to local and long distance wire and wireless networks are today, and
WHEREAS, Assembly Bill 1614 (California) would propose to place a moratorium
on all sorts of local taxation of the Internet, including taxatIon of telecommunications
services over the Internet under the City's eXisting Utility User's tax ordInance, and
WHEREAS, such legIslation, If adopted as presently worded, could result In an
unfair bias, faVOring the Internet telecommunicatIon technology over numerous other
technologies, and could, therefore, violate the taxation prinCiple of neutrality, and such
legislation would create an economic incentIve to shIft communications from a taxable
technology to an exempted one, resulting In a loss of local tax revenues to the City,
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NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SANTA MONICA
DOES HEREBY RESOLVE AS FOLLOWS
SECTION 1 Unless AS 1614 IS amended to permit neutrality of tax application
under the City's eXisting Utility User's Tax ordinance, the City opposes AS 1614
SECTION 2 If neutrality IS assumed under such legislation, then to the extent that
the City's Utility User's Tax ordinance applies to telecommunication services over the
Internet, It would only apply to the access fee (or similar fees for transmiSSion services),
and not to "content" or "commerce" taking place over the Internet
SECTION 3 The City Clerk shall certify to the adoption of this Resolution and
thenceforth and thereafter the same shall be In full force and effect
APPROVED AS TO FORM
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Marsha Jones Mbutne
City Attorney
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Adopted and approved thIs 22nd of July 1997
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I, Mana M Stewart, CIty Clerk of the City of Santa MOllIca. do hereby certIfy that the
foregomg ResolutIOn 9170(CCS) was duly adopted at a meetmg of the City CouncIl held on the
22nd of July, 1997 by the follo\\<1.ng vote
Ayes
CouncIlmembers
Femstem. Genser, Mayor Pro T em Holbrook, Mayor
O'Connor, Rosenstem
)Toes
CouncIlmemhers
None
Abstam
Councllmemhers
None
Absent
Councllmemhers
Ebner. Greenberg
ATTEST
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Mana M Stewart, CIty Clerk